Quaker State Subsidiaries Settle FTC Charges Against Slick 50

Agreement Safeguards $10 Million in Redress to Consumers

For Release

Three subsidiaries of Quaker State Corp. have agreed to settle Federal Trade Commission charges that ads for Quaker State's Slick 50 Engine Treatment were false and unsubstantiated. Under the terms of the settlement, the companies will be barred from making certain claims and required to have substantiation for claims about the performance, benefits, efficacy or attributes of their engine lubricant products. In addition, the settlement will preserve the Commission's option to seek consumer redress if class action suits currently being litigated against Quaker State and its subsidiaries result in less than $10 million in consumer redress.

The three Quaker State subsidiaries named in the settlement are Blue Coral, Inc., Blue Coral-Slick 50, Inc., and Blue Coral-Slick 50, Ltd. Blue Coral, Inc., is based in Cleveland, Ohio. Since its 1978 introduction, Slick 50 has about 30 million users world-wide and retails for about $18 a quart. The company claims to have about 60% of the engine treatment market.

In July, 1996, the FTC issued a complaint against four now-defunct Quaker State subsidiaries, which have been succeeded in interest by the three subsidiaries named in the settlement. The FTC's 1996 complaint charged that ads for Slick 50 claiming improved engine performance and reduced engine wear were deceptive. According to the 1996 complaint, Quaker State's subsidiaries aired television and radio commercials and published brochures carrying claims such as:

--"Every time you cold start your car without Slick 50 protection, metal grinds against metal in your engine";

--"With each turn of the ignition you do unseen damage, because at cold start-up most of the oil is down in the pan. But Slick 50's unique chemistry bonds to engine parts. It reduces wear up to 50% for 50,000 miles";

--"What makes Slick 50 Automotive Engine Formula different is an advanced chemical support package designed to bond a specially activated PTFE to the metal in your engine."

According to the FTC complaint, these claims and similar ones falsely represented that without Slick 50, auto engines generally have little or no protection from wear at start-up and commonly experience premature failure caused by wear. In fact, the complaint alleged, most automobile engines are adequately protected from wear at start-up when they use motor oil as recommended in the owner's manual. Moreover, it is uncommon for engines to experience premature failure caused by wear, whether they have been treated with Slick 50 or not, according to the FTC. Finally, the FTC alleged that Slick 50 neither coats engine parts with a layer of PTFE nor meets military specifications for motor oil additives, as falsely claimed.

The FTC complaint also charged that Slick 50 lacked substantiation for advertising claims that, compared to motor oil alone, the product:

--reduces engine wear;

--reduces engine wear by more than 50%;

--reduces engine wear by up to 50%;

--reduces engine wear at start-up;

--extends the duration of engine life;

--lowers engine temperatures;

--reduces toxic emissions;

--increases gas mileage; and

--increases horsepower.

In addition, the complaint alleged that the company did not have adequate substantiation for its advertising claims that one treatment of Slick 50 continues to reduce wear for 50,000 miles and that it has been used in a significant number of U.S. Government vehicles.

Finally, the complaint challenged ads stating that "tests prove" the engine wear reduction claims make by Slick 50. In fact, according to the FTC complaint, tests do not prove that Slick

50 reduces engine wear at start up, or by 50%, or that one treatment reduces engine wear for 50,000 miles.

The agreement to settle the FTC charges bars any claims that:

--engines lack protection from wear at start-up unless they have been treated with Slick 50 or a similar PTFE product;

--engines commonly experience premature failure caused by wear unless they are treated with Slick 50 or a similar PTFE product; or,

--Slick 50 or a similar PTFE product coats engine parts with a layer of PTFE.

In addition, the agreement will prohibit misrepresentations that Slick 50 or any engine lubricant meets the standards of any organization and misrepresentations about tests or studies.

The settlement also prohibits any claims about the performance, benefits, efficacy, attributes or use of engine lubricants unless Quaker State's subsidiaries possess and rely on competent and reliable evidence to substantiate the claims. In addition, it prohibits the Quaker State subsidiaries from claiming that any other Slick 50 motor vehicle lubricant reduces wear on a part, extends the part's life, lowers engine temperature, reduces toxic emissions, increases gas mileage or increases horsepower unless they can substantiate the claim. The subsidiaries also will be required to notify resellers of the product about the settlement with the FTC and the restrictions on advertising claims.

Finally, the agreement holds open the option that the FTC may seek consumer redress. If the private class action suits against Slick 50 currently under litigation do not result in at least $10 million in redress to consumers, the agency reserves its right to file its own federal district court action for consumer redress. In addition, the FTC has reserved its right to seek to intervene in any class action suit to oppose a settlement it believes is not in the public interest.

The Commission vote to approve the proposed consent agreement was 5-0. A summary of the agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, consent agreement, and an analysis to aid public comment are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov and also from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Claudia Bourne

Farrell Office of Public Affairs

202-326-2181

Elaine D. Kolish or Mary K. Engle

Bureau of Consumer Protection

202-326-3042 or 202-326-3161

(FTC File No. D09280)

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